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August 18, 2014

Is it a News Story or Is it an Advertisement?

Filed under: Business,Internet — Edgar (aka MrConsumer) @ 5:48 am

 Every day, MrConsumer scours the Internet to find the 25 or so stories that we feature in Consumer World each week. And it should come as no surprise that Google News is a primary source. Last week, when searching for news stories one day, this was what Google News presented:

Google result

The very first result looked like a great story to bring to the attention of Consumer World readers — “10 Ways You’re Throwing Money Away Daily.” Upon clicking the link, one is brought to that story on the LA Times website:

latimessmall1
Click on picture to expand to full size,
click resulting picture if necessary to enlarge,
and scroll to the top.

It is a very long story offering all these tips, with appropriate graphics for each one. Tip #3 caught our eye, suggesting that money could be saved on eyewear by purchasing a vision plan:

eye tip

The link presented in the tip takes the reader to VSP — Vision Service Plan — where it purports to show dramatic savings on a pair of eyeglasses. And one can enroll in the plan right there.

Pretty clearly, this whole long story providing savings tips had a single purpose — to drive readers to this insurance plan. But it was a news story, right?

Scrolling back to the top of the page, the secret is revealed:

*MOUSE PRINT:

disclaimer

There it is. “Advertisement” in tiny letters (actual size). Did you catch it when you first looked at the full graphic above? Do you think that most people caught it?

This whole “story” that went on and on, page down after page down about eight times, was actually an ad, and not editorial content presented by the LA Times. This is called “native advertising” where the content is made to fit it more with the surrounding content on a webpage and appear less like an advertisement.

We wrote to the LA Times and explained how something like this could mislead readers. We asked some very pointed questions about this manner of presenting advertising with such a small disclaimer, how it wound up in Google as a news story, and if they were going to try to fix the problem. They responded:

“…the advertisement in question is clearly labeled as such and the only path for readers to find that content was intended to be via an latimes.com panel that is also clearly labeled as advertising. However, your inquiry brought our attention to the fact that although this ad – and others of the same ilk – is not included in our News SiteMap and the page has “noindex nofollow” directives, there appears to be a technical glitch with Google News. We are working with Google to find out why the content is indexed incorrectly and have the issue fixed as soon as possible. In the meantime, we have removed the advertisement from our site to eradicate potential for further confusion.” — V.P. Communications, Los Angeles Times

While we are gratified that the paper acted so quickly to remove the advertisement, they seem not to have a problem with such a small disclaimer at the top. We hope they will reconsider that position, and if they continue to display advertisements that look identical to news stories, that they will take further steps to more clearly identify and differentiate that kind of content.

• • •

January 6, 2014

On Time Delivery Guaranty Gotchas

Filed under: Business,Internet,Retail — Edgar (aka MrConsumer) @ 6:31 am

  UPS, and to a lesser extent Federal Express, got black eyes this past holiday season when thousands of packages were left undelivered in time for Christmas.

Some retailers like Amazon, Kohl’s, and Walmart promised to make peace with their customers by variously offering shipping refunds, gift cards, or complete refunds. But what about UPS and FEDEX themselves?

Both companies have on-time guarantees.

For UPS, air shipments are guaranteed throughout the holiday season. But, if you used UPS Ground service, they have conveniently excluded the two weeks before Christmas:

*MOUSE PRINT:

UPS guarantee

Federal Express on the other hand, appears to have left their full money back guarantee intact.

FEDEX guarantee

For overnight deliveries, their policy is generous:

“FedEx offers a money-back guarantee for every U.S. shipment. You may request a refund or credit of your shipping charges if we miss our published (or quoted, as in the case of FedEx SameDay®) delivery time by even 60 seconds.”

Wow, even if they are only a minute late you get back your money. Wow, again.

In small type, however, the customer is referred to Fedex’s “terms and conditions” and ground tariff. For both overnight express and ground services, their money back policy begins this way:

*MOUSE PRINT:

“We offer a money-back guarantee for our services. This guarantee can be suspended, modified or revoked at our sole discretion without prior notice to you.” [emphasis added]

So they have this great policy, but tuck into the fine print that they can suspend it at will. Nice, huh?

Sure enough, FEDEX created a special holiday money back guarantee . For FEDEX Ground shipments, they invoked that weasel clause just when it might be needed most.

*MOUSE PRINT:

“The money-back guarantee for FedEx Ground® and FedEx Home Delivery® services will be suspended temporarily for packages tendered during the 14 calendar days before Wednesday, Dec. 25, 2013 (Wednesday, Dec. 11, through Tuesday, Dec. 24).”

And for FEDEX express services, they give themselves an extra 90 minutes to make on-time deliveries, just like UPS.

The company issued a statement after the big media uproar about packages being delivered late (primarily by UPS), saying:

“Every single package is important to us, and we will continue to work directly with customers to address any isolated incidents.”

The bottom line is that these companies have tried to absolve themselves of on-time delivery responsibilities, and have been relatively silent about how they would make good for disappointed shoppers.

• • •

November 11, 2013

When Advertising Masquerades as News

Filed under: Business,Internet — Edgar (aka MrConsumer) @ 6:13 am

When you go to a respected news site online, you expect to find links to many different stories that the publisher has on its own website, and that it has found elsewhere and recommends.

Reuters, one of the two leading newswire services, is no exception. When you click on a particular story link, you are taken to a page with that story. Surrounding the story are various lists of popular stories, recommendations of other stories, and conventional advertisements.

Here is such a page captured on October 27, with red outlines added for emphasis [see full size]:

In the left column is a box entitled “Recommended,” where various video stories are listed. [Note: screenshots below were captured prior to October 27 on a different page of Reuters and sent to Reuters for comment.] One would naturally believe that Reuters’ editors have chosen this content as their recommendations to readers.

Recommended Video

In the bottom right-hand corner of that box is a tiny question mark. If you click on it, an explanation pops up:

*MOUSE PRINT:

Outbrain

It says that a firm called “Outbrain,” not Reuters, has selected these videos and they were paid to place these links here and make these recommendations.

Similarly, further down the page, there is a box with a list of stories that says “More from Reuters” on the left, and another list of stories captioned “From Around the Web” on the right. That little question mark appears inconspicuously in the corner again.

Reuters recs

*MOUSE PRINT:

The same disclosure is made about Outbrain there too, and one might believe that the stories in the right column are Outbrain’s recommendations (if you knew enough to click the link), but you would never imagine that the stories on the left where it says “More from Reuters” might also be paid links. (No matter what story you click on in that box, the status bar of your browser indicates that link first goes through Outbrain.)

In all there are six sections on this page (see red boxes) where news stories are linked but where that content is not actually recommended by Reuters. Someone has bought advertising space on the Reuters website to promote those stories (or the advertisements that might be on those pages). While sections labeled “Sponsored Content” should signal the reader that this is really an advertisement, other sections with just question mark or a little logo, do not clearly convey a similar message.

The Federal Trade Commission has worked with Google, for example, to ensure that paid search results that are really advertisements, be completely segregated from actual search results, be labeled as “ads,” and in some cases be on a contrasting background. Don’t news organizations have the same obligation not to misrepresent the content on their webpages and to better distinguish paid links to news stories from actual recommendations of the host site?

Mouse Print* sent Reuters detailed questions regarding the concerns raised by their sponsored content boxes, but received no response.

The Federal Trade Commission is said to be planning a roundtable discussion next month about this issue, which is referred to as “native advertising” or “sponsored content.”

[Please note: Reuters is but one of many news sites that feature these story recommendation boxes (CNN, Time, and 90,000 other sites use Outbrain), and Outbrain is just one of the firms that deals in sponsored content.]

• • •

September 2, 2013

Inside the NY-AG’s Lawsuit Suing Donald Trump Over “Trump University”

Filed under: Business,Finance — Edgar (aka MrConsumer) @ 5:46 am

Last week, the New York Attorney General sued Donald Trump and others claiming a host of illegal practices engaged in by Trump University, the Donald’s real estate education program.

Among the AG’s allegations (and some things you didn’t hear in the news):

  • Students were induced to sign up for classes under the belief they would be taught Donald Trump’s personal strategies and techniques for investing in real estate. The material in the courses was never reviewed by Donald Trump and actually came from other seminars and courses about real estate. It also did not include some of the topics specifically advertised.
  • Trump’s free education seminar was really a sales pitch for a $1495 three-day course. His three-day program was itself in part an upsell sales pitch for an elite course costing up to $35,000. Trump University claimed this was a philanthropic endeavor that Trump would not profit from. In fact, they took in $40 million in sales, and Trump himself pocketed some $5 million in profits.
  • Trump University was repeatedly told by the New York State Education Department as far back as 2005 that it needed to be licensed and could not use the term “university” in its name. They didn’t change the name, however, until 2010.
  • Trump claimed in advertisements that he handpicked the instructors/mentors in the program, when he never did.
  • There were claims that the instructors were real estate experts, when some of them had just filed for real estate-related bankruptcies.
  • Students were told they would easily and quickly make back the money they spent on courses because mentors would in essence hold their hand through their first transaction. Mentors, however, disappeared after the course was over in some cases and students were left with significant credit card debt for the classes.
  • After the lawsuit was filed, Donald Trump defended the educational program saying that students filled out an evaluation and 98% said they were satisfied. What Trump didn’t say, and what the NY-AG alleges in his complaint, is that students filled out the non-anonymous evaluations before the course was over, were pressured to give the course good grades, and in some cases negative evaluations were changed to positive ones by staff.

And it goes on and on.

*MOUSE PRINT:

Here is a link to the actual complaint filed by the New York AG, with great detail about the promises made, and what was really going on behind the scenes. For example, most of the instructors/mentors were paid commissions based on the number of students they convinced to pay for the advanced seminars.

It is fascinating reading beginning to end. [Click the icon in the bottom right corner below to see the complaint full screen.]

• • •

May 27, 2013

Kohl’s Sued Over Fake Sales

Filed under: Business,Retail — Edgar (aka MrConsumer) @ 5:44 am

This is the final part (for now) in our series of stories about retailers that are alleged to inflate their regular prices as a means of offering fictitious discounts during “sales.”

In 2010, a California consumer sued Kohl’s for just that, but the lower court threw out his case saying that he did not suffer a loss of money. A federal appeals court last week, however, overturned that decision. Here is the case decision.

Antonio Hinojos, the consumer in the case, made a whole bunch of purchases at Kohl’s of items that he thought were great bargains:

Samsonite luggage that was advertised as 50% off its “original” price of $299.99, Chaps Solid Pique polo shirts that were marked down 39% from their “original” price of $36.00, Chaps Solid Pique polo shirts that were marked down 32% from their “original” price of $39.50, Chaps t-shirts that were marked down 40% from their “original” price of $26.00, and Sonoma Life & Style Henley Tops that were marked down 40% from their “original” price of $22.00.

He later found out (not clear how) that he had been taken — presumably learning that those goods rarely if ever sold for the so-called “original” or “regular” price.

Kohl’s defended itself by arguing that Hinojos lost neither money nor property because he acquired the merchandise he wanted at the price that was advertised, even if the advertised price was falsely represented as a “sale.” And therefore, under California law, they said, absent a loss of money or property, the consumer had no case.

The consumer’s key argument was that he did have a loss of money because he “would not have purchased [these] products at Kohl’s in the absence of Kohl’s misrepresentations.”

The judge agreed, ruling:

*MOUSE PRINT:

“Most consumers have, at some point, purchased merchandise that was marketed as being “on sale” because the proffered discount seemed too good to pass up. Retailers, well aware of consumers’ susceptibility to a bargain, therefore have an incentive to lie to their customers by falsely claiming that their products have previously sold at a far higher “original” price in order to induce customers to purchase merchandise at a purportedly marked-down “sale” price.

In sum, price advertisements matter. Applying Kwikset [a related court case] in a straightforward manner, we hold that when a consumer purchases merchandise on the basis of false price information, and when the consumer alleges that he would not have made the purchase but for the misrepresentation, he has standing to sue under the UCL and FAL because he has suffered an economic injury.” — Judge Reinhardt

The case now heads back for trial.

The FTC has guidelines about deceptive price advertising:

§ 233.1 Former price comparisons.

(a) … If, on the other hand, the former price being advertised is not bona fide but fictitious—for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction—the “bargain” being advertised is a false one; the purchaser is not receiving the unusual value he expects. In such a case, the “reduced” price is, in reality, probably just the seller’s regular price.

(b) … The advertiser should be especially careful, however, in such a case, that the price is one at which the product was openly and actively offered for sale, for a reasonably substantial period of time, in the recent, regular course of his business, honestly and in good faith—and, of course, not for the purpose of establishing a fictitious higher price on which a deceptive comparison might be based.

MrConsumer investigated Kohl’s a decade ago, tracking prices of 20 items for 103 consecutive days. The result: the average item was on sale 86 percent of the time, and one-in-four items never sold for the so-called “regular” or “original” price at any time in that three and half month period. Looks like little has changed.

• • •
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